The 1997 financial crisis not only dashed Varisorn Rakphan's dreams of continuing his studies abroad, but also brought his business, the Chumphon Cabana Resort and Diving Centre, to the brink of collapse, with a huge debt of more than Bt300 million.

That the business, with Varisorn still at the helm, is now a subject for study by master's-degree students of business administration at Chulalongkorn University is a measure of its extraordinary recovery - and all because of His Majesty the King's sufficiency-economy philosophy.

Varisorn, who is managing director of the resort, said the company borrowed a total of Bt135 million from banks before the crisis, to be spent on renovations to upgrade the business from three stars to five.

However, saving the company meant Varisorn shouldered a total debt of Bt300 million, including high interest costs and "informal" loans. Interest alone cost Bt1.9 million a month.

Then came more trouble. Chumphon province suffered severe flooding in the same year, and the resort faced a shortage of food supplies. Many of its outsource suppliers were forced to shut down.

"I thought then that the business would not survive," he recalls. "Our spending was higher than income, we had a huge debt burden, and many new problems were pouring in."

Having no idea how he would survive, he reflected on how he had reached such a grim state of affairs.

"We moved too fast to follow the spirit of globalisation and didn't concern ourselves with readiness in terms of human resources and technology," he says. "We drew huge investments on the basis of outside factors, including the world economy, the exchange rate and oil prices, and we didn't consider the inside factors."

Fortunately, His Majesty visited the province in the year following the crisis, to inspect the progress of kamling, a water-management system designed on His Majesty's initiative to help solve future flooding. Representatives of the Royal Office accompanying His Majesty stayed at the resort and suggested that Varisorn adopt His Majesty's sufficiency-economy philosophy.

Varisorn heeded the advice, beginning by allocating some of the resort's land to growing rice and vegetables, to be used in the resort's kitchens.

As well, some of the by-products were developed into materials of benefit to the resort, including charcoal from rice husks, organic fertiliser and biodiesel.

Those involved in the project urged Varisorn to forget his money and debt problems for a while and concentrate on making himself happy and enthusiastic.

Varisorn set aside nearly five hectares of land in the resort area for an orchard, more rice fields, a rice mill, an area for vegetable production and a small factory to produce biodiesel and biofertiliser.

Production was not only directed to the resort, but also sold to visitors.

Followed His Majesty's sufficiency-economy philosophy in the years since then, the resort has been able to reduce its costs 30-40 per cent, by relying on its own supplies of vegetables, meat and energy.

"Our resort is really self-sufficient compared with the earlier period, when we had to buy everything," Varisorn says. "We have our own organic rice and farm crops to attract health-conscious guests." The resort even has an herbal-spa service for customers.

Many of the farm products are grown by the families of the resort's employees. About 20 families supply raw materials and are happy with their higher incomes.

The resort also contracts 600 farming families in the surrounding area to grow raw materials, generating extra money and a better way of life for the locals.

"Sufficiency-economy management has allowed me really to understand how to grow from the inside. The theory has encouraged me to control the resort's supply chain, so that business expansion is supported by my growing strength," Varisorn says.

The Chumphon Cabana Resort and Diving Centre currently generates an average of Bt4 million a month, and Varisorn is aiming at Bt6 million. He is confident of paying off his remaining debts of Bt140 million within the next six or seven years.

The business has also expanded from 40 rooms before the crisis to 130 now.

The resort's sufficiency-economy model has become a case study for master's-degree students of business administration at Chulalongkorn University's Faculty of Accountancy. The faculty considers sufficiency-economy management a practical business model, and it is being made a part of the degree curriculum.

Achara Pongvutitham

The Nation